How Insurance Raises Cost

Yep the market would be cheaper. Getting politicians and insurance companies to reduce their influence could only be a good thing.

An important thing to remember is that Medicare & Medicaid are a HUGE subsidy on health care.

This is the main reason health costs are so high, and have been rising ever since these programs inception in 1960s.

This is the same reason govt grants on education have raised tuition so much

Politicians don't say the solution is more insurance. Politicians say the solution is more government. After all, that's all they have to sell, therefore it has to be the solution to all your problems.

JohnJ,

Why don't you get the corn cob out of your rear! Then maybe you can understand what is trying to be accomplished!

As someone who does not have employer funded health insurance, I purchase my own coverage. My coverage is basically catastrophic coverage. So, when I go to the doctor, I pay for almost everything out of pocket.

The situation with my doctors is far worse than the one described by your emailer. When I ask them what a procedure/test/whatever is going to cost, they don't know.

Ponder that for a second. Can you think of *any* other service provider who isn't immediately able to tell you what your costs will be *before* you incur them?

Instead, at the doctor, they all will refer me to their billing office. Once at the billing office, they have multiple rates depending on who the insurer is. And if you are not insured, sometimes they have their "standard" rate, which has to be jacked up to astronomic sizes so that they can claim to the insurance companies that they're getting a 30% discount.

So before I receive treatment it's extremely difficult to determine what something is going to cost. If I go to urgent care (e.g. when the billing office is closed) it's impossible to find out what it's going to cost. And that's for the doctor that I'm in the office trying to visit. Calling around for prices? If I'm not already listed as a patient, they won't even give me the number to the billing office.

The doctor's office is the place where the treatment takes place. The billing office is where the payment takes place. The separation between receiving the care and paying for it is what is driving the cost of healthcare, and health insurance through the roof. Replacing private 3rd party payment with public 3rd party payment is not going to have any impact on reducing costs.

BTW, I ranted about this in more detail on my blog here: http://dullgeek.blogspot.com/2008/11/debate.html

Come on John get real. My wife had a MRI and the price was $1600, but the insurance already had the discount at down to $400.

Everyone knows that what they qoute you and charge the insuranmce is two different things.

Thank you for your posts & tweets. You are spot on.

That said, I have a high deductible medical plans & HSA. My experience in trying to obtain price information on procedures is identical to poster Joker above. As a consumer it's virtually impossible to get price info. to compare.

Skip the "health care reform" crap. Get the consumer clear price & quality information and let us comparison shop for the best price & treatment. That's the *only* way that the cost of health care will come down.

Keep the government out of my health care!

Get out the shovel!

I manage a Dental Office and its billing dept. I have billed various private insurances, Unions, Benefit funds, and medicaid (Medical here in CA) I am familiar with the PPO system in its entirety and hopefully I can shine a light on this issue for you.

There’s some terminology I would like to define so that you may better understand the industry lingo, and perhaps help you, when negotiating with your health provider directly.

‘UCR’- (Universal Care Rate or Usually Customary rate) are a schedule of fees the provider sets (typically higher than in network fees) that is appropriate to the office location and/or gives a reasonably good profit margin.

‘Maximum Allowable’- A set of fees an insurance company deems is a maximum they would pay per procedure for a patient seeing a provider in the provider’s area. These are mostly designed for out of network providers. Procedure maximums vary geographically.

‘In Network’- Insurance companies set a schedule of fees and when Doctors/providers join the network they are then contracted to the fees provided by an insurance company. All co-payment and deductible are pre determined according to the plan and the schedule of fees. Fees are determined by the maximum allowable and/or the type of plan the subscriber has.

‘Out of Network’- Insurance companies determine non contracted providers as out of network. These providers are either to be paid according to the maximum allowable or a percentage of the UCR. Why would insurance companies pay according to provider’s ucr, more than the maximum allowable? It beats me, but I’ll go into in it more detail later on.

Things you should understand if you have or are shopping for insurance. When you go to an ‘Out of Network’ provider, you can be legally charged the difference between the providers UCR fee and the insurance maximum fee. Keep in mind, the provider’s UCR fee can be astronomical and so can that difference. In-network providers join networks because they agree to the procedure fees that an insurance company offers. They are then contracted to these fees, which are almost always lower than the UCR fees of the provider. The higher the contracted fee schedule, the higher the co-payments and/or deductibles. A contracted provider can not collect co-pays and/or deductibles higher than that of the contract fee schedule. Even after reaching your insurance maximum, you are still entitled to contracted fees of your insurance plan. So in a sense insurance companies have already shopped providers/doctors in your area and bargained lower fees for you. This is why it almost always makes sense to go to an In-network (contracted) provider. Additionally this is why when shopping for insurance one should also look at how big the provider and/or specialist network is in your area.

Things you should know if you are insured or un-insured and are paying out of pocket. Never pay the UCR fees! They are set higher on purpose for several reasons. The main reason and it is an innocent one-convenience. Often times insurance companies might have raised the maximum/contracted fee on a specific procedure, and have not notified the provider. If the provider bills with the older fee schedule amount, the insurance company will pay according to the old fee. By billing with higher ucr fees on the claims, the provider ensures himself proper per-procedure payment of the true maximum allowable under the patients benefit plan. You can negotiate down at least 30% from the providers UCR fee schedule. On preventative/diagnostic procedures you can negotiate as far down as 80%. If you are capable to pay in full, present that to the provider or business owner. Significant discounts are given for patients that pay in full, pay in cash, or pre pay for their procedures. Some providers even design a custom fee schedule for regular patients who pay out of pocket.

Now regarding the user email. He was either misled or misunderstood exactly what information the provider’s office gave him. He was quoted a figure of $1500 for the MRI which is clearly the UCR fee of the provider. The fact that the providers’ office said they would do it for $575 supports my earlier statements on just how far down one can negotiate to pay on an out of pocket basis. Rest assured, if the provider billed $575, the insurance company would have paid just that. Instead, if the reader/e-mailer would check his explanation of benefits from the insurance company, he would find that the provider billed $1500 and the insurance paid either according to the maximum or contracted fee for that provider’s area. The question is, why would you want to save your insurance company money? It’s in your best interest to keep your doctor happy, and not the insurance company.

The truth is, most providers would do the procedures at or lower then the insurance rate so long as they don’t have to deal with the bureaucracy of insurance companies. From personal experience despite the bureaucracy, private insurances are still far more superior and efficient than that of Medicaid or union funds. Although you and your provider can negotiate your own low cost plan for preventative care, insurance is still necessary for major care as those costs can be astronomical in a serious illness.

I hope this has been helpful.

Here's a story about a set of clinics that do not take insurance:

http://www.komonews.com/news/local/50427237.html

The problem is that doctors are usually given a little kickback under the table to send patients to MRI centers.

Just like drugs doctors prescribe.

The practice should be BANNED.

Typical oversimplified, irrelevant Stossel.

It makes sense to insure health costs, because they can be unpredictable and pricy. Insurance of some sort must be central to the system. So, even if the average deductible is raised, patients will not be sensitive to covered costs.

But the premise is flawed. Sure, some people overuse care. But most people hate going to the doctor. So, the overuse from the hypocondriacs is cancelled by the underuse from other patients. There isn't any evidence, or even logical reason to believe without evidence, that what Stossel says here is valid. And, the basic premise is wrong - doctors should set the standard, not the patients, not the lawyers, and not the insurance companies.

We pay about twice as much for health care as the rest of the developed world, and most of the world gets better outcomes. In most developed countries there is NO cost sensitivity from the consumer. And Stossel says we need to raise deductibles? What a tool.